2.3 Demand

Why don't we always act rationally to maximise our benefits as consumers?

difficulty in calculating the benefits = adverts product placement develop buying habits = always buy at Sultan Centre, same brand eg polo shirts influenced by the behaviour of others = influencers on tictoc

what assumption is used when predicting demand?

Consumers always try to maximise their benefits

what does demand/effective demand mean?

demand refers to the willingness and the ability of customers to purchase a good or service at the given price.The higehr the price of a product the lower it demand tends to be

what is a demand graph?

a demand graph shows that lower quantities at higher prices and larger quantities of any good will be bought at lower prices as more people will be able to afford it -have to give up less of income (maximise benefits)

how is a demand curve constructed?

the demand curve is constructed by showing prices on the verital (y) axis and quantities demanded along the (x) horizontal axis

what does demand curve show?

higher prices lead to lower quantities being bought and lower prices led to higher quantities being bought.Only shows the relationship between price and quantity demanded - assumes everything else which might affect how much we buy stays the same anythign else wcauses the demand curve to shift. Eg Ice cream sales - assume temperature stays the same

how are lower prices and their effect hsown on demand curve?

As the price falls, more people are willing and able to buy a good/service at the new, lower price. As the price falls from P1 to P2, quantity demanded increases from Q1 to Q2. This is known as an extension of demand.

describe the slope of a demand curve:

a demand curve usually slopes down from left to right

what is law of demand?

The demand for a good or service is inversely related to the price of the good all service (price falls demand increases-more bought) if all other factors affecting demand stay the same (cetris peribus).

Reason for law of demand

there are two reasons for the inverse relationship of price and demand: -As the price of a good/service falls,the customers real incoem rises emaning that with the same amoutn of income the customer is able to buy mroe products at lower prices -as the price of a good/service falls a higher number of customers are able to pay so they are mroe likely to buy the product

what does Ceteris paribus mean?

all things remaining equal

what does demand curve show relationship of?

a demand curve shows the relationship between demand and price,all other factors remaining the same

what is contraction?

the movement down the demand curve when the quantity demanded for a product decreases following an increase in tis price

what is expansion/extension?

the movement up the curve when the quanitity demanded of a good increases following a fall in price

what would cause a shift in the left of a demand curve?

a demand curve will shift to the left if smaller quantities are wanted tha before at each price prices

what would cause a shift to the right in a demand curve?

a dmeand curve will shift to the right if larger quantities are wanted than before at given prices.This would also cause the price of the good to increase

what are some factors causign demand shifts?

-increase/decrease in income

-change in trends/habits/fashion and so change in preferance

-increse in population/market size

-advertising

-age distribution,gender,ethnicity and religious beliefs of the population

-price and quality of substitute and complementary goods (change in demand for complementary goods),

-governemnt policies

-economy

-other thigns liek weather can afefct demand for icecream,umbrellas and jackets,

what does an increase in income do?

an increase in incomes leads to a shift to the right in the demand curve s people are able and willing to buy mreo goods and services

what affect because of increas eof income can cause a shift to the left?

if some products become less popualr as income rises:they may be regarded as inferior as spending power increases so damand shifts to the left

what does age distribution have to do with demand?

many products appeal to certain age groups so the rising number of young people in many countries could increase in demand for things like trainers

what are substitutes?

a good or service which can easily replace another.

how does substitute price affect demand for product?

if the price of one substitute increases their will be greater demand for the other as consumers choose the cheaper alternative. The demand curve for a product is likely to shift the right if a substitute produce rises in price and is likely to shift to the left if a substitutes product falls in price.

what are complementary goods?

products used and bought together by consumers so the demand for one is linked to the price of another. They are jointly demanded

how does complemenetary goods affect demand?

if consumers purchase one good the demand for the other increases causing a shift to the right. If the price of the good falls,this will likely lead to an increase in demand for its compelmentary good too

how does advertising affect demand?

advertising is used to persuade,inform and remind people to buy products

how would government policies affect demand?

rules and regulations such as imposition of taxes will affect demand. Sales tax causes price to increase so demand decreases. However subsidies increase demand as the goods/services are cheaper

how does the economy affect demand?

the state of an eocnomy (eg in econnomic boom or recession) woudl imapct spendign pattern of population. For example a lack of confidence in the economy and unemployment may decrease demand for certain goods and services.

what causes movement along a demand curve?

changes in price

what does disposable income mean

the amount of income people have to spend on goods after tax and other compulsory dedductions

what causes shifts in demand?

changes in factors other than price-changes ind emand not quanitity demanded. A left shift in demand curve means less demanded at all rpice lvels. A right shift in demand represents an increase in demand at all price levels.

what is market demand?

the market demand is the sum of all the individual demand for a particular product at each price level. eg in 500 girls and 400 boys bougth movie tickets at